The Dy. CIT., Circle-3(1)(2), Ahmedabad V. M/s. Raghuvir Exim Ltd., Ahmedabad

ITA 2824/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8274 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 27-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: P M MEHTA SHRI G M THAKOR
• Keywords: Deemed to accrue or arise in india; Retrospective amendment; Permanent establishment
• Section: 143(3); 5(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE DCIT, CIRLE - 3(1)(2), AHMEDABAD (APPELLANT) VS M/S. RAGHUVIR EXIM LTD. NR. GUJARAT BOTTLING, RAKHIAL ROAD, RAKHIAL, AHMEDABAD PAN: AAACR7492N (RESPONDENT) REVENUE BY : S H RI V.K. SINGH , SR. D . R. ASSESSEE BY: S H RI P.M. MEHTA SHRI G.M. THAKOR , A.R. DATE OF HEARING : 20 - 03 - 2 018 DATE OF PRONOUNCEMENT : 14 - 05 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2010 - 11 , ARIS ES FROM ORDER OF THE CIT(A) - 9 , AHM EDABAD DATED 16 - 08 - 2016 , IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. T HE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.75,94,236/ - MADE U/S.40(A)(IA) OF THE ACT. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT VID E CIRCULAR NO. 7 DATED 22/10/2009 WHICH HAS RETROSPECTIVE EFFECT ON CIRCULAR NO. 23 DATED 23/07/1969 AND CIRCULAR NO. 786 DATED 07/02/2000 WHEREIN IT WAS PERMITTED ANY INTEREST PAYMENT WITHOUT DEDUCTING OF TDS AND THEREFORE SUCH TRANSACTIONS ARE LIABLE FOR DEDUCTION OF TDS U/S. 195(1) OF THE ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER TO THE ABOVE EXTENT. I T A NO . 2824 / A HD/20 16 A SSESSMENT YEAR 2010 - 11 I.T.A NO. 2824 /AHD/20 16 A.Y. 2010 - 11 PAGE NO DCIT VS. M/S. RAGHUVIR EXIM LTD. 2 4. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) MAY BE SET - ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED TO THE ABOVE EXTENT. 3 . IN THIS CASE, ASSESSMENT U/S. 143(3) WAS COMPLETED ON 19 TH MARCH, 2013 DETERMINING TOTAL INCOME OF RS. 62 , 02 , 980/ - . SUBSEQUEN TLY , THE CASE WAS REOPENED U/S. 147 OF THE ACT ON THE GROUND THAT ASSESSEE HAS NOT DEDUCTED TDS U/S. 195 OF THE ACT IN RESPECT OF COMMISSION PAYMENT OF RS. 75 , 94 , 236/ - MADE TO THE NON - RESIDENTS. CONSEQUENTLY, THE ASSESSING OFFICER HAS DISALLOW ED THE COMMI SSION EXPENSES AS PER THE PROVISION OF SECTION 40(A)(IA) OF THE ACT. 4 . AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DELETED THE IMPUGNED ADDITION ON THE GROUND THAT ASSESSE IS NOT REQUIRED TO DEDUCT TDS ON SUCH COMMISSION PAYMENT TO NON - RESIDENT S WHO DO NOT HAVE ANY PERMANENT ESTABLISHMENT OR PRESENCE IN INDIA. T HE ASSESSEE HAS USED THE SERVICES O F VARIOUS PERSON S STATION ED ABROAD FOR PROCURING THE PURCHASE ORDERS. THE SERVICES HAVE BEEN RENDERED AND UTILIZED OUTSIDE INDIA . T HE PAYMENT S O F COMMISSION WERE ALSO MADE TO THESE PERSONS OUTSIDE INDIA IN FOREIGN CURRENCY IN THEIR BANK ACCOUNT S . T HE LD. DEPARTMENTAL REPRESENTATIVE HAS PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND, LD. COUNSEL HAS FURNISHED PAPER BOOK CONTAINING THE FOLLOWING JUDICIAL PRONOUNCEMENT S AND CIRCULARS : - I. DCIT V. WELSPUN CORPORATION LTD. FOR A.Y. 2010 - 11 VIDE REPORTED IN [2017] 77 TAXMANN.COM 165 (AHMEDABAD - TRIB.) II. D ECISION DATED 20.01.2016 BY HON'BLE HIGH COU RT OF MADRAS IN CASE OF CIT V. FARIDA LEATHER COMPANY FOR A.Y. 2010 - 11 VIDE REPORTED IN [2016] 66 TAXMANN.COM 321 III. D ECISION DATED 27.09.2016 BY HON'BLE HIGH COURT OF GUJARAT IN CASE OF ABM STEELS (P.) LTD. FOR A.Y. 2004 - 05 VIDE REPORTED IN [2016] 75 T AXMANN.COM 182 (GUJARAT) IV. CIRCULAR NO. 7/2009 [F.NO.500/135/2007 - FTD - I] DATED 22.10.2009 I.T.A NO. 2824 /AHD/20 16 A.Y. 2010 - 11 PAGE NO DCIT VS. M/S. RAGHUVIR EXIM LTD. 3 5 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. THE ASSESSING OFFICER HAS DISALLOWED COMMISSION OF RS. 75,94,236/ - U/S. 40( A)(IA) OF THE ACT ON THE GROUND THAT ASSESSEE HAS NOT DEDUCTED TAX U/S. 1 95 OF THE ACT IN RESPECT OF PAYMENT OF COMMISSION MADE TO NON - RESIDENT PARTIES. THE LD. CIT(A) HAS DELETED THE ADDITION ON THE GROUND THAT THE SERVICES OF THE COMMISSION AGENTS HAVE BEEN RENDERED AND UTILIZED OUTSIDE INDIA . . AFTER CONSIDERING THE ABOVE FACTS WE OBSERVE THAT ALL NON - RESIDENT PARTIES ARE PLACED OUTSIDE INDIA AND THEY HAVE PROCURED ORDER S FROM THE PURCHASE PARTIES BASED IN ABROAD. IN THIS CONNECTION, WE HAVE ALSO PER USED THE PROVISION OF SECTION 5 AND 9 OF THE ACT. AS PER SECTION 5(2) OF THE ACT SCOPE OF INCOME IN THE CASE OF NON - RESIDENT IS AS UNDER: - (I) INCOME IS RECEIVED OR DEEMED TO BE RECEIVED IN INDIA. (II) INCOME ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR A RISE TO HIM IN INDIA. WE HAVE FURTHER NOTICED THAT IN THE CASE OF THE ASSESSEE T HE NON - RESIDENT S HAVE NOT ANY PERMANENT ESTABLISHMENT IN INDIA. THE NON - RESIDENTS HAVE RENDERED THEIR SERVICES OUTSIDE INDIA AND THEIR SERVICES HAVE BE E N UTILIZED OUT OF IND IA. THE PAYMENT MADE TO THE NON - RESIDENT S WERE NOT FEES OR TECHNICAL SERVICES. IN VIEW OF THE PROVISION OF SECTION 5 R. W. S. 9 OF THE ACT IN THE CASE OF NON - RESIDENT ONLY THE INCOME RECEIVED/DEEMED TO BE RECEIVED OR INCOME ARISING OR DEEMED TO ACCRUE OR ARISE IN INDIA IS CHARGEABLE TO TAX AND NOT INCOME RECEIVED OR ACCRUED OUTSIDE INDIA. IN VIEW OF THE ABOVE FACTS AND FINDINGS, WE UPHELD THE DECISION OF THE LD. CIT(A). ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEA L OF THE REVENUE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 14 - 05 - 201 8 SD SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 14 /05 / 2018 I.T.A NO. 2824 /AHD/20 16 A.Y. 2010 - 11 PAGE NO DCIT VS. M/S. RAGHUVIR EXIM LTD. 4 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,